Adera Announces Interim Report for Third Quarter 2001.Business Editors GOTHENBURG, Sweden--(BUSINESS WIRE)--Oct. 24, 2001 Interim Report for Third Quarter 2001 -- Sales during the third quarter of 2001 totalled SEK 52 M (SEK 122 M in the year-earlier period) and amounted to SEK 275 M for the nine-month period (396). For comparable units, sales were SEK 50 M (74) for the quarter and SEK 218 M for the nine months (254). -- The number of employees at September 30, 2001 was 298, which is 254 fewer than on the same date in the preceding year and 288 fewer than the 586 employees at December 31, 2000. -- All remaining goodwill was written down as of September 30. The nonrecurring write-down amounts to SEK 55 M. -- The operating result before goodwill amortization and items affecting comparability (EBITA) for the quarter was a loss of SEK 28 M (loss: 39) and a loss of SEK 95 M (loss: 53) was reported for the nine- month period. Adera proceeded during the third quarter with the streamlining and restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). of operations to two business areas: IT-driven Business and Operations Development and Integrated Communication. The streamlining has contributed to a clearer presentation of Adera's expertise, internally and externally. Discussions are under way in each business area that can result in new future scenarios. Step by step, conditions have improved to achieve profitability, although given prevailing market conditions it will require a longer time to reach breakeven breakeven 1. The level of output or sales necessary to cover fixed expenses. Companies in industries that have high fixed costs and, consequently, high breakevens, such as automobile and steel manufacturing, are likely to exhibit large fluctuations that was anticipated at mid-year. Through streamlining and focusing of operations on present customers and projects, it has been possible to reduce the costs significantly. These efforts continue. Taking into account the rising uncertainty in the world, this is a factor with great strategic importance for the future.
Business Area IT-driven Business and Operations Development
2001
Q 3 Q 2 Q 1 Jan-Sep
Sales, SEK M 26.4 44.5 54.0 124.9
Number of employees (end of period) 163 182 182 163
The IT-driven Business and Operations Development business area is active in the fields of strategic consulting, value-building processes, change management, advanced system development, system integration and web development. Operations are conducted under two trademarks, Astrakan and OOPix, both of which were acquired by Adera during the earlier expansion phase of the company. Astrakan, with operations in Stockholm and Gothenburg, focuses on IT-related operations development and training, while OOPix, with offices in Stockholm, works with in-depth IT and systems development. Sales Sales in the third quarter were affected by vacations, as well as by decisions taken by a number of customers to postpone post·pone tr.v. post·poned, post·pon·ing, post·pones 1. To delay until a future time; put off. See Synonyms at defer1. 2. To place after in importance; subordinate. parts of their IT investments to a later date. It is mainly the demand for such services as system development and system integration that declined or is being pushed forward. However, increased demand was noted with regard to operations development and training. Market development The general recession and growing concern as a result of recent global events contributed to a market situation that is extremely difficult to assess. No one can currently determine how deep the recession will be or when a swing upward will occur. This has complicated possibilities of discerning dis·cern·ing adj. Exhibiting keen insight and good judgment; perceptive. dis·cern  ing·ly adv. a distinct demand
trend in any area. Customers are prioritising among projects very
strictly, which means that the lead-times for securing new assignments
are longer than previously. However, it is assessed that there is a
continued favourable market for consultants with advanced technology as
specialists.
In particular, Astrakan's know-how within IT-supported operations development, with the aim of reducing costs and shortening lead-time, is at a premium in an extremely cost-oriented market. In contrast, with regard to demand for IT consulting services Noun 1. consulting service - service provided by a professional advisor (e.g., a lawyer or doctor or CPA etc.) service - work done by one person or group that benefits another; "budget separately for goods and services" requiring less expertise and for resource consulting, price pressure is expected to remain very heavy. Examples of new business during the period Examples of customers that provided new or repeat business to Adera IT are Duni, FMV FMV - full-motion video , Strangbetong, Scania, Compaq EMEA (Europe, Middle East, Africa) Refers to that region of the world. For example, one might see products packaged differently for the UK, EMEA and Asia Pacific markets. , Ascom, SACO Saco, city, United States Saco (sô`kō), city (1990 pop. 15,181), York co., SW Maine, on the Saco River; settled 1631, inc. as Pepperellboro 1762; name changed to Saco 1805; inc. as a city 1867. and Arbetsmiljoverket. Projects in progress correspond to sales of slightly more than two months. This status is equivalent to the situation earlier in the year.
Business Area Integrated Communication
2001
Q 3 Q 2 Q 1 Jan-Sep
Sales, SEK M 25.5 34.8 56.8 117.1
Number of employees (end of period) 113 150 176 113
The Integrated Communication business area works primarily with marketing and branding strategies, e-business analyses, advertising, PR and events. The business area cooperates closely with Astrakan with regard to developing and implementing technical platforms, re-engineering of marketing processes and change management. There are three separate brands in the business area: Blanking (Malmo), Adera (Gothenburg, Ljungby, Stockholm) and Nucleus nucleus, in physics nucleus, in physics, the extremely dense central core of an atom. The Nature of the Nucleus Composition (London). Adera focuses on marketing within B2B (Business to Business) Refers to one business communicating with or selling to another. See B2B e-commerce, B2C and B2G. B2B - business to business , in which digital media is an attractive and growing segment, while Blanking is active in strategic marketing and brand issues for consumer products companies (B2C (Business to Consumer) Refers to a business communicating with or selling to an individual rather than a company. See B2B. ). Adera Nucleus in London is a separate unit within the business area. Currently, the company has 21 employees. Sales Sales in the third quarter were affected by vacations. The workload The term workload can refer to a number of different yet related entities. An amount of labor While a precise definition of a workload is elusive, a commonly accepted definition is the hypothetical relationship between a group or individual human operator and task demands. and, consequently, revenue per employee, improved toward the end of the period. Market development During the third quarter, the advertising industry was heavily affected by the recession. Media investments declined and many companies tabled planned marketing activities. The lead-time for securing new projects increased. The decline in the consumer sector was particularly significant. As a result, Blanking in Malmo as well as Nucleus in London and Adera in Stockholm were hit during the third quarter. The situation in the B2B area is somewhat more stable. Old customers remained loyal and increased their assignments to a certain extent. This is partially attributable to the fact that Adera's experience within integrated communication, supported by new technologies, proved to be exceptionally valuable for the companies seeking to cut costs and increase efficiency of their market communications. Examples of new business during the period Examples of customers that provided new or repeat business are Alfa Laval Alfa Laval AB is a Swedish company, founded in 1883 by Gustaf de Laval and Oscar Lamm. The company is a leading producer of specialized products and solutions used to heat, cool, separate and transport products such as oil, water, chemicals, beverages, foodstuffs, starch and , Volvo Penta
Volvo Penta is a subsidiary and a business area of Volvo. It provides engines and complete power systems to leisure boats, workboats, power-generating equipment and similar industrial applications. , SCA (Single Connector Attachment) An 80-pin plug and socket used to connect peripherals. With a SCSI drive, it rolls three cables (power, data channel and ID configuration) into one connector for fast installation and removal. , Skanska, Tidningsutgivarna, Molnlycke Healthcare, Telia, Trelleborg, Esab, Wireless Maingate and others. Projects in progress correspond to sales of about four months. This is an improvement compared with the situation earlier in the year. Comments to the income statement and balance sheet
Sales and earnings
2001 2000
Q 3 Q 2 Q 1 Jan-Sep Jan-Sep
Sales, SEK M
"Adera today" 50.0 72.0 95.8 217.7 253,6
Other 1) 1.8 23.0 31.9 56.8 142,0
Total 51.8 95.0 127.7 274.5 395,6
EBITA 2), SEK M -28.1 -36.3 -30.6 -95.0 -53,2
Number of employees (end of period) 298 418 481 298 552
1) Units that are in the process of being liquidated or have been
liquidated during the year.
2) Adjusted for items affecting comparability.
Sales during the third quarter amounted to SEK SEK In currencies, this is the abbreviation for the Swedish Krona. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 52 M, which is a decrease of SEK 70 M compared with the year-earlier period. For comparable units ("Adera today"), the decline was SEK 24 M for the quarter and SEK 36 M for the first nine months of the year. Sales during the third quarter did not reach the level expected at the time the decision on the restructuring program and new business area organization was taken at the end of the second quarter. This has resulted in a significant decline in earnings. Operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. were 30% lower in Q3 compared with Q2 and 45% lower compared with Q1 and were down 40% compared with the year-earlier period. The reduction in costs during the period was fully in line with plans. Concurrent with continued streamlining and focusing within each business area, efficiency enhancement and continued cost reductions are the Group's highest priority in the short term. The market was very difficult to assess already in early summer and the uncertainty remains. A positive factor for Adera is that orders for Adera Communication appear relatively satisfactory and the balance between costs and revenues is at the expected level. Orders booked for Adera IT, for work to be carried out in the fourth quarter, corresponds to sales of about two months, which is on level with the first half of the year. A write-down Write-Down Reducing the book value of an asset because it is overvalued compared to the market value. Notes: This is usually reflected in the company's income statement as an expense, thereby reducing net income. of goodwill SEK 55.0 M, representing all remaining goodwill, was effected in the third quarter. The write-down was made after consideration of several factors, including the stock market's valuation of Adera. The book value of the goodwill was thus assessed to significantly exceed the recovery value, considering prevailing market conditions and taking into account the historical earnings trend.
Items affecting comparability
2001 2001 2000 2000
Jul-Sep, Jan-Sep, Jul-Sep, Jan-Sep,
3 months 9 months 3 months 9 months
SEK M SEK M SEK M SEK M
Closing costs, Adera Inc. (USA) - - - 11.8
Restructuring costs - 76.4 - -
Total - 76.4 - 11.8
SEK 60 M of the total restructuring costs was disbursed during the period from January to September, of which SEK 21 M during the third quarter. The remaining portion is reported as a provision in the balance sheet. Other provisions, contingent liabilities Contingent Liability 1. The possibility of an obligation to pay certain sums dependent on future events. 2. Defined obligations by a company that must be met, but the probability of payment is minimal. Notes: 1. and assets pledged Provisions for receivables Receivables An asset designation applicable to all debts, unsettled transactions or other monetary obligations owed to a company by its debtors or customers. Receivables are recorded by a company's accountants and reported on the balance sheet, and they and include all debts owed under examination, amounting to SEK 3.7 M at year-end, have been settled as a result of repayments having been received in conjunction with the sale of parts of the operations of the Dutch subsidiary during the second quarter. At the same time, the effect on earnings from this sale has been reserved in its entirety The whole, in contradistinction to a moiety or part only. When land is conveyed to Husband and Wife, they do not take by moieties, but both are seised of the entirety. in the accounts. During the third quarter, an agreement was reached concerning a dispute for which a provision was made at year-end. The costs arising from the settlement were met by a reversal of the provision, with the result that profit for the year was not affected. No significant changes in contingent liabilities or assets pledged have occurred since year-end 2000. Investments No significant investments were made during the third quarter. Investments in fixed assets fixed assets npl → activo sg fijo fixed assets npl → immobilisations fpl fixed assets fix npl → during the period from January to September amounted to SEK 1.5 M. A supplementary purchase amount of SEK 1.5 M for the acquisition of an operation in December 1999 was disbursed during the first quarter. Liquidity and financing The Group's cash and bank balances amounted to SEK 51.9 M at September 30, a decline of SEK 157.0 M since year-end 2000. The decline during the third quarter amounted to SEK 54.3 M, of which SEK 9.6 M was attributable to the liquidation The collection of assets belonging to a debtor to be applied to the discharge of his or her outstanding debts. A type of proceeding pursuant to federal Bankruptcy of the Dutch subsidiary. Utilization of overdraft A check that is drawn on an account containing less money than the amount stated on the check. The term overdraft is also used in reference to the condition that exists when vouchers facilities (or the equivalent outside Sweden) has declined by SEK 9.4 M since year-end 2000. Utilization of overdraft facilities increased by SEK 5.6 M during the third quarter. Other interest-bearing liabilities have declined by SEK 5.4 M since year-end 2000. During the third quarter these liabilities have declined by SEK 0.3 M excluding the effect of the liquidation of the Dutch subsidiary. No new share issues were made and no new loans were assumed during the period. Under the anticipated market conditions, a positive cash balance is predicted at year-end 2001. Changed classification in the balance sheet of long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. receivables and liabilities Long-term interest-bearing liabilities at year-end 2000 and in earlier interim reports this year included a promissory note promissory note, unconditional written promise to pay a certain sum of money at a definite time to bearer or to a specified person on his order. Promissory notes are generally used as evidence of debt. issued to the sellers of Nucleus Ltd, for which collateral was pledged in the form of a bank guarantee payable to the sellers. Adera has deposited a corresponding amount with the bank as counter-security for the bank guarantee. This deposit was reported previously as a financial fixed asset. The reporting that best reflects the purpose of the contract terms and the result of the complex transaction chain is, however, net accounting of these to items. Consequently, this has been applied from September 30, 2001. As of that date, the amount reported net was SEK 37.0 M. At year-end 2000, the corresponding amount was SEK 37.4 M. The balance sheets for earlier periods have been adjusted to reflect the change in classification. Other assets other assets Assets of relatively small value. For financial reporting purposes, firms frequently combine small assets into a single category rather than listing each item separately. Current assets Current Assets Appearing on a company's balance sheet, it represents cash, accounts receivable, inventory, marketable securities, prepaid expenses, and other assets that can be converted to cash within one year. , excluding cash and bank balances, have declined by SEK 75.0 M since year-end 2000. The decline during the third quarter amounted to SEK 46.1 M, of which SEK 33.8 M was attributable to the discontinuing of the Dutch subsidiary. During the third quarter, accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying declined by SEK 31.1 M, representing a decrease of SEK 54.8 M since year-end 2000. The value of unbilled un·billed adj. 1. Not having been billed or charged for: unbilled medical charges. 2. Appearing, as in a movie, without being credited: an unbilled walk-on. revenues at September 30, 2001 was SEK 19.9 M, after deduction deduction, in logic, form of inference such that the conclusion must be true if the premises are true. For example, if we know that all men have two legs and that John is a man, it is then logical to deduce that John has two legs. of advance invoicing in·voice n. 1. A detailed list of goods shipped or services rendered, with an account of all costs; an itemized bill. 2. The goods or services itemized in an invoice. tr.v. . This represents a decrease of SEK 6.1 M since year-end 2000 and a decrease of SEK 4.1 M during the third quarter. As of September 30, 2001, other receivables amounted to SEK 15.0 M, a decrease of SEK 14.1 M since year-end 2000 and SEK 10.9 M since the preceding quarter. Shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. and number of shares As of September 30, 2001, shareholders' equity amounted to SEK 73.2 M, (SEK 310.3 M at December 31, 2000), which corresponds to SEK 3.64 (14.59) per share. The table below shows the changes in the number of shares, share capital and shareholders' equity during the current and preceding year. Future report dates Year-end report on operations in 2001 February 7, 2002 Annual report March, 2002 Note: This report has not been examined by the Company's auditors. For additional information, please contact: Rolf Jansson, President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. (+46 705-72 72 02) Adera AB (publ) Ostra Hamngatan 41-43, SE-411 10 Gothenburg, SWEDEN Telephone: +46 31-701 67 00 Fax: +46 31-701 67 01 www.aderagroup.com |
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